Return on investment cannot be used effectively to evaluate profit centers because it motivates managers to make suboptimal decisions from the viewpoint of the organizations' owners.

Question

Quizplus · Accepted Answer

Return on investment (ROI) can lead managers to focus on short-term gains or avoid necessary investments that could lower ROI, which may not align with the long-term interests of the organization's owners.

Return on Investment Cannot Be Used Effectively to Evaluate Profit